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Friday, August 8, 2014

Protest busting solicitation busted on technicallity -- and a short history of bid protesting

The following story is very roughly related to a prior recent post, Open sourcing sole sourced contracts. It is a very readable column, and you should take the short time needed to click the link and read it. I've only provided a taste teaser for the whole piece.

When it comes to GAO bid protests, pay careful attention to the web of procedure

Bid protests, especially at the Government Accountability Office, can involve many procedural, non-substantive issues — the timing of the protest, the content of the protest, and the like. Sometimes, if you are not careful, you can find yourself caught up in this web of procedure and get bounced out of the protest before the GAO can ever consider the merits of the protest. That’s what happened to Harris Corp. in this case.

In this case, Harris proposed to provide a Motorola radio and, during the first protest, Motorola proved that it did not and would not provide Harris with permission to offer its radio on the procurement. The GAO recommended the existing proposals be re-evaluated, which the Army did. The Army found the Harris proposal to be non-compliant and awarded the contract to Motorola. Harris then filed this new protest.

Harris first argued that the RFP requirement to include an explicit agreement with the manufacturer was overly restrictive and not necessary to meet the agency’s needs. Harris also alleged that it believed the Motorola proposal also failed to meet the RFP requirements. The GAO dismissed both protest claims on procedural grounds.

First, the Harris allegation that the RFP is overly restrictive of the needs of the agency relates to the terms of the RFP itself. The GAO rules clearly state that any challenge to the terms of the RFP must be filed prior to the time for proposal submissions. Since the Harris protest was well after that fact, Harris failed to meet the procedural requirement for challenging the terms of the RFP.

The remaining allegation, that Harris thought the Motorola proposal failed to include sufficient agreements to document the parts of the radio system that Motorola did not manufacture, is more interesting and more frustrating for the protester. The GAO dismissed this allegation as mere speculation and not sufficient to meet the requirements of a well-founded protest. In particular, the GAO held that “speculation, without more, does not meet the requirements of our Bid Protest Regulations that a protest include a detailed statement of the legal and factual grounds for protest.”

More interestingly, the GAO noted that Harris, as the awardee, had failed to participate as an intervenor under the GAO rules in the first protest. An awardee is always allowed to participate in a protest against its award, to protect its own interests during the protest. The GAO noted that “while Harris was not required to intervene in the earlier protest, if Harris had participated, it would have had an opportunity to review the Motorola proposal as part of the record, and could have advanced any and all challenges to the acceptability of the Motorola proposal at that time.” In other words, had they participated in the first protest and reviewed the Motorola proposal, they would have had a reasonable basis to raise the issue in the second protest.
You can read the whole GAO opinion here.

The protest procedure was begun less than 100 years ago with an eye to facilitate government expenditure accountability (more on that in a moment). But, the government also has a blind eye. Whether your protest gets the careful, prophylactic gaze of the good eye, or the short shrift of the blind eye, depends on your understanding and compliance with the technicalities required to place your problem before the reviewing agency or court, be that GAO or any other reviewing authority. The represents a balancing of the need to police government expenditures in real time before badly spent money flies out the door, and the need to make sure that the government wheels keep turning however poorly the money has been spent. I would point out that this balance also depends on how well the government back-stops the protest process with critically meaningful audit review and enforcement procedures to make sure that those poorly spent dollars are uncovered and the error of those ways corrected, albeit after the fact.

The history of bid protests is outlined by Daniel I. Gordon, the Associate Dean for Government Procurement Law Studies at The George Washington University Law School and the former Administrator for Federal Procurement Policy, in his paper, "Bid Protests: The Costs are Real, But the Benefits Outweigh Them", published in 42:3 Pub. Contract L.J., Spring 2013, and available through the Faculty Scholarship at Scholarly Commons online here. The history noted below and the paper from which is comes has been noted before on this blawg, but bears repeating. As usual, I selectively cut, rearrange, paraphrase and paste, including deleting footnotes and citations, to suit myself, so read the source.

He explains,
In 1924, a few companies began writing to the then relatively new General Accounting Office (GAO) to complain that agencies had improperly awarded contracts to their competitors. There was hesitation within the GAO about the appropriateness of considering complaints by private firms about the federal procurement process. Ultimately, the GAO decided to consider the complaints as part of its responsibility to ensure that funds appropriated by Congress are lawfully spent, which is also known as the Office’s account settlement function.

Then in 1925, a company wrote to the GAO alleging that Panama Canal officials had issued a solicitation with specifications for a truck that were “wired” to a particular brand name and that thereby unfairly precluded the complaining firm from fair consideration for the contract. The GAO requested the agency’s views on the matter, and, when the Canal authorities admitted that they had used the specifications of one company’s truck in the solicitation, the GAO issued the first published bid protest decision, ruling that the challenged solicitation was unlawful.

For many years, courts did not consider bid protests, so that the GAO (and the contracting agencies themselves) represented the only place to file a protest.14 Then, for three decades U.S. district courts had bid protest jurisdiction, beginning with the U.S. Court of Appeals for the District of Columbia Circuit’s decision in Scanwell Laboratories, Inc. v. Shaffer.

Meanwhile, from the enactment of the Competition in Contracting Act of 1984 (CICA) until its jurisdiction ended pursuant to section 5101 of the Clinger Cohen Act of 1996, there was another administrative forum with jurisdiction over bid protests that pertained to information technology: the General Services Administration’s Board of Contract Appeals. Finally, a statutory change in 1996 resulted in the Court of Federal Claims, which had only pre-award protest jurisdiction for many years, later gaining post-award jurisdiction as well.

Consequently, for more than a decade now, the only places outside the contracting agency where disappointed bidders have been able to file protests have been the GAO and the Court of Federal Claims. From time to time there are differences between the GAO and the Court of Federal Claims, with respect to both process and outcome. The author views occasional differences between the two fora as inevitable. That is particularly the case where, as here, one forum is administrative and the other is judicial. In any event, having two fora hear bid protests may be healthy for the procurement system.

The protest process has received substantial attention around the world in recent years. More than ever, a protest system has come to be seen as a required part of a good public procurement regime. As evidence of this trend, the U.S. includes a bid protest provision in the free trade agreements it negotiates. The World Trade Organization’s (WTO) Agreement on Government Procurement (GPA) likewise includes a provision requiring that WTO members that accede to the GPA have a forum to hear protests (called a domestic review procedure). Finally, there is a protest provision in Chapter VIII of the model procurement law of the United Nations Commission on International Trade Law (UNCITRAL).

Perhaps most interesting is the attention bid protests have received during the past twenty years in the European Union (EU). Not mentioned in the EU’s Public Procurement Directives, protests were first addressed by the European Commission in what is known as the Remedies Directive. Initially issued in 1989, the Remedies Directive was revised in 2007. The Remedies Directive has had an enormous impact, requiring all member states to have a forum that considers protests. Furthermore, the Court of Justice of the European Union has also issued decisions that have reshaped the protest process in the EU. Of particular importance was the Alcatel decision that led to the requirement (codified in Article 2a of the 2007 revision to the Remedies Directive) that there be a “standstill” period (typically ten days) between the announcement of a potential awardee and contract signing to allow a window for filing protests. Bid protest procedures have therefore received important consideration from the international community.
Many posts on this blawg have referred to the EU rules and the interplay of EU and Member State rules of procurement, e.g., here and here and here

As well, this blawg carries many procurement stories from elsewhere around the globe, including Canada, Caribbean nations, Africa, India and Southeast Asia. Procurement is a work in progress, and there is much to be learned from looking around.







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